Ofcom: Netflix and Lovefilm haven't changed Sky's movie dominance

Still wants to loosen its grip on movie market

Ofcom has requested the Competition Commission still look into Sky's dominance in the pay TV movie market, despite streaming opposition.

It was thought that the arrival of Lovefilm and Netflix in the home movie market would be enough for Ofcom to get off Sky's back over its huge movie bounty but this doesn't seem to be the case.

The regulator has announced that it is still requesting that the satellite giant's stranglehold be looked into, as it could still be seen as anti-competitive.

In a recent report Ofcom suggested: "We have not seen any clear evidence presented to demonstrate that the subscription video on demand services offered currently by LoveFilm and Netflix exert a sufficient competitive constraint on Sky Movies."

Now and next

The report also warns of Sky's upcoming PAYG TV and movie service Now TV, believing that the launch of this may be seen as a direct rival of Lovefilm and Netflix.

"What impact Now TV will have on competition will depend on the content of this proposed service and its price point.

"In 2010, we considered a proposal from Sky to launch a limited Sky Movies product at a relatively low price point on DTT, within a service known as 'Picnic'.

"While Sky's reasons for launching Now TV are unclear, there may be some similarities with the Picnic proposal. It could be intended as a response to the Lovefilm and Netflix services."

It concludes by noting that in the future Netflix and Lovefilm may well offer competition in the movie space but this isn't the case at the moment.

"Lovefilm and Netflix clearly have ambitions in the pay TV retail market, but their ability to compete directly with Sky on a sustainable basis is not certain and critically dependent on access to compelling content which is currently controlled by Sky and likely to remain so.

"Therefore, it is unclear that they can be relied upon in the future to address the adverse effect on competition and the resulting detriment to consumers identified by the CC [Competition Commission] in its Provisional Findings."